Maine budget will always be a mixed bag

Carter F. McCall | BDN

Carter F. McCall | BDN

Rep. Kenneth Fredette, R-Newport

By Ken Fredette, Special to the BDN •June 23, 2013 2:29 pm

If the Legislature’s work during its annual sessions can be considered a meal, the biennial budget is the main course. It’s the meat, the substance, the blueprint for state government over the next two years. As such, it carries some heftier constitutional requirements for passage and, by extension, for compromise. The budget requires a two-thirds vote of each house of the Legislature, which means it can’t be passed without both Democrats and Republicans signing on.

The final product is therefore bound to be a mixed bag of gains and concessions for each party. The current budget proposal does a few things right. Importantly, it preserves the tax cuts implemented under Republican leadership in 2011. These included cuts to the income tax, death tax and many targeted tax incentives to promote economic development in Maine. They were a major step in the right direction for our state and were estimated by the nonpartisan Beacon Hill Institute at Boston’s Suffolk University to generate enough economic activity to create 3,700 new Maine jobs by 2015.

The budget also softens the blow to local governments by preserving $125 million of the $200 million worth of state funding that goes to support our towns and cities. It did, however, leave an appropriate level of cuts to state funding for towns. The outrageous growth of government spending has to be addressed at all levels: federal, state and local.

Republicans feel strongly that no government should be immune from the ramifications of their spending, including Maine towns, which have increased their property taxes at about double the rate of inflation over the past 20 years. Eliminating all subsidies to towns in one fell swoop would have been too harsh, but we think it’s appropriate that this budget trimmed them back. What remains is a modest enough cut that no well-managed town government should have to raise property taxes.

The budget does, on the other hand, contain many bitter pills for Republicans. We feel strongly that increasing the sales tax by 10 percent and the meals and lodging taxes by 14 percent, pulling $178 million out of Maine’s recovering private sector, is unnecessary and unwise. Even with the tax cuts enacted two years ago, revenue to state government is actually up over last year. A lack of revenue is not our problem. In fact, quite the opposite.

The meteoric rise in spending is the culprit for Maine’s perennial budget woes. A tax increase, whether large or small, is never appropriate if state government’s spending priorities are out of whack, and money is being wasted. Unfortunately, both are true. Our medical welfare program has nearly doubled in size since 1997. In this budget, Democrats insisted on millions in pay raises for government employees and used tax increases on working Mainers to pay for them. We believe there is something profoundly wrong with that.

The budget crafted by Republicans in 2011 implemented the largest tax cut in Maine’s history, much-needed welfare reform and sensible pension reforms that saved us $200 million in the current budget cycle. We would like to have seen similar measures in this budget to stimulate Maine’s economy and put our fiscal house in order, but we struck the best balance we could in our negotiations with the majority party.

In the end, budget-writing is a compromise. Democrats wanted $400 million in tax increases, and Republicans wanted none. Republicans wanted sizeable cuts to areas of state government that Democrats didn’t want to touch. We met in the middle on both counts.

Republican lawmakers understand the frustration of the governor and many in our base of support who are unhappy with this budget. If we alone were writing the budget, it would look much different. However, we pushed in the right direction, and our negotiators on the budget committee did their best to fight for Republican values.

For too long, the standard operating procedure in Augusta has been to sign up for massive new long-term spending commitments, act surprised when those programs go over budget, and rush to patch those shortfalls with accounting gimmicks and tax hikes. Some politicians point to narrow populations who benefit from the programs and insist that the spending must go on while ignoring the ramifications for the broad swath of struggling Mainers who must pay for it all.

Mainers are hard-working and frugal. They take the long view and are skeptical of shortcuts. They don’t mind helping out a neighbor in need, but they don’t want to be taken advantage of. State government should take a page from their book.

Rep. Ken Fredette, R-Newport, is the House Republican leader in the Maine House of Representatives. His columns appear monthly.